The rand was firmer against major global currencies on Friday morning, holding on to gains made this week in the wake of dovish commentary from US Federal Reserve chair Jerome Powell.

Powell’s comments about the weakness of the US economy has boosted market expectations of interest rate cuts from the Fed, allowing the rand to push almost 2% higher against the dollar this week, reaching a five-month high on Thursday.

Comments by US President Donald Trump regarding the US-China trade war rattled sentiment a little on Thursday. Trump accused China of failing to live up to a pledge to increase purchases of US farm products.

However, this boosted the price of gold as investors sought safe-haven assets. A firmer gold price often supports the rand, as the precious metal is a key foreign exchange earner for SA.

At 9.30am the rand was 0.45% firmer at R13.9049/$, 0.35% stronger at R15.6666/€ and 0.32% up at R17.4412/£. The euro was flat at $1.1266.

Gold was 0.6% firmer at $1.411.92/oz.

With the current momentum, the rand is likely to test the R13.80/$ mark, said Peregrine Treasury Solutions analyst Bianca Botes in a note. 

The prospect of US interest rate cuts has increased the chance of local rate cuts. Local interest rate cuts could see the rand trade to the upper band of R14.15/$ provided that the global backdrop remains the same, Botes said.

Focus is now on US economic data as investors wait for the July 31 Fed meeting, although some local developments are being watched, most notably developments at Eskom.

Finance minister Tito Mboweni has indicated that plans to restructure Eskom are progressing, while reports have suggested that the Public Investment Corporation (PIC) has offered to swap debt owed to it by Eskom for equity.